Cisco likely to indicate solid enterprise spending
Cisco's fourth quarter results on Tuesday are expected to reveal solid enterprise technology spending patterns.
Cisco is expected to earn 35 cents a share on revenue of $9.3 billion for its fiscal fourth quarter ending July 31. For the year, Cisco is expected to report earnings of $1.33 a share on revenue of $34.78 billion. All estimates come from Thomson Financial.
Overall, sales of routers, switches, storage and VOIP gear are expected to be strong for Cisco. "We believe the North American equipment market showed signs of improvement during Cisco's July quarter and anticipate the company will report accelerating year/year growth rates following two consecutive quarters of mid-single digit growth rates," said Piper Jaffray analyst Troy Jensen in a research note.
Here are some key mileposts to ponder in Cisco's quarter:
- Enterprise spending: Cisco is expected to benefit from solid corporate spending patterns as enterprises upgrade networks around video and new Internet Protocol services. Also Thomas Weisel analyst Jason Adler notes that Cisco is becoming a growing brand in the small to mid-sized business (SMB) market.
- Carriers still building out networks: Cisco is also benefiting from telecom carrier capital spending. These giants are increasingly adding new services and AT&T and Verizon are targeting fiber to the premises (FTTP) networks. Juniper's quarter also indicated that service providers are spending heavily.
- Cable providers were pushing set-top boxes hard this quarter. In advance of a cable card mandate allowing consumers to buy their own cable boxes, service providers like Comcast were pushing digital boxes. That means Cisco's set-top business (Scientific Atlanta) is expected to do well.
The one worry spot for Cisco will be the outlook for the fiscal first quarter. Fiscal 2008 is expected to be solid with revenue growth in the 15 percent ballpark. For fiscal 2008, Cisco is expected to report earnings of $1.55 a share on revenue of $39.7 billion.